Brokerage Firm Failed to Establish Adequate Supervisory System, Improperly Used Unregistered ‘Finder’ in Florida
Silver Leaf Partners, LLC (CRD#: 126694/SEC#: 8-65902) is a New York-based brokerage firm that is licensed to operate in 50 U.S. states and territories, including in Florida. It first entered the securities industry in 2003.
On June 29th, 2020, the National Adjudicatory Council (NAC) ruled that this firm failed to create and maintain an adequate supervisory system in accordance with applicable securities laws and FINRA regulations (Complaint No. 2014042606902).
Among other things, the NAC determined the firm improperly used and paid transaction-related commissions to an unregistered ‘finder’ in Florida. Below, our Miami investor losses attorneys provide a more detailed overview of the findings against Silver Leaf Partners, LLC.
Background: Origins of the Investigation
In 2014, a multi-million dollar FINRA arbitration claim was filed against Silver Leaf Partners, LLC and three other brokerage firms. Eventually, the firms were (collectively) held liable for more than $16 million in damages. From that, additional allegations emerged that Silver Leaf Partners, LLC lacked a proper supervisory system and that it was paying transaction-related commissions to non-brokers.
Use of an Unregistered ‘Finder’ in Florida
According to the allegations raised by the FINRA’s Department of Enforcement, Silver Leaf Partners, LLC was working with a man identified only as ‘SH’ in the legal complaint. Described as an ‘unregistered finder’, SH is a corporate executive based in Florida. To be clear, SH is not a licensed broker or any other type of trained securities law professional.
Regulators contend that Silver Leaf Partners, LLC paid SH more than $200,000 in financial compensation related to transactions. As much as $2.7 million in additional transaction compensation was paid to several other unregistered individuals and entities in the following years. FINRA alleges that Silver Leaf Partners, LLC lacked any form of written supervisory procedures or supervisory system to prohibit or otherwise oversee commission-based payments made to unregistered individuals and unregistered entities.
Sanctions: Fine, Partial Suspension, and Revise Procedures
Based on the findings that Silver Leaf Partners, LLC improperly paid transaction-based commissions to an unregistered finder, the National Adjudicatory Council (NAC) sanctioned the firm. For its violation of FINRA Rule 3110 and FINRA Rule 2010, Silver Leaf Partners has been ordered to:
- Pay a $50,000 fine and pay additional $19,651.94 in legal costs;
- Suspend its corporate advisory business; and
- Work with an independent consultant to revise its supervisory practices.
Broker-dealers are responsible for supervising the conduct of all brokers and associated persons. It is their duty to protect the financial interests of their clients. If an investor suffers losses based on a brokerage firm’s failure to supervise, the firm may be held liable.
Call Our Miami, FL Investment Losses Attorney for Help
At Carlson & Associates, P.A., our Miami investment fraud lawyers are experienced and focused advocates for clients. If you suffered financial losses in unregistered securities, we are here to help. Call our law firm now for a completely confidential assessment of your case. We represent investors.
Resources:
brokercheck.finra.org/firm/summary/126694
finra.org/sites/default/files/fda_documents/2014042606902%20Silver%20Leaf%20Partners%20LLC%20CRD%20126694%20NAC%20Decision%20sl.pdf
